Monday, October 31, 2011

America’s Exploding Pipe Dream - NYTimes.com: "We are slowly — and painfully — being forced to realize that we are no longer the America of our imaginations. Our greatness was not enshrined. Being a world leader is less about destiny than focused determination, and it is there that we have faltered."
Click at the end of this short article to the data.

Tuesday, October 25, 2011

Hussman Funds - Weekly Market Comment: Penny Wise and Euro Foolish - October 24, 2011: "[...] Add in just over $7 billion in research through the National Science Foundation, and about $120 per citizen a year is spent by the government on essential medical and non-military scientific research through these agencies. These figures pale in comparison to the amounts that are increasingly demanded in order to make bondholders whole on their voluntary, bad investments. "

Must read. Our national priorities are almost incalculably screwed up. Thanks to the money the corporations and the rich in general are pouring into Congress to protect their own assets. And of course thanks to the Fed, who grovels before Wall Street just because the reality distortion field of being in New York or Washington seems to demand it.
"And that's what we've come to - government of the banks, by the banks, and for the banks (because banks are people too) ."

Over the past six months, food and energy prices have risen at an annualized rate of 17 percent, prompting speculation of a possible price-wage spiral that will result in rampant inflation. A wage-price spiral occurs when wage earners start to demand higher nominal wages just to keep up with rising inflation (trying to hold real incomes constant). In turn, these wage increases raise the costs of production, which squeezes margins and induces business owners to raise prices. These even-higher prices then push wage earners to try and negotiate even higher wages, which again prods businesses to raise prices, and so on¦resulting in a rapid run-up in inflation."

Americans for Greater Inequality - NYTimes.com: "As Rich Oppel and I wrote in an article today, the Republican presidential candidates have been steadily promoting flatter — and therefore more regressive — tax overhaul plans. Flatter taxes have of course always been the holy grail for many in the conservative base, but now such proposals seem to be gathering broader support, too....

Ms. Kuziemko, a professor at Princeton, and Mr. Norton, a professor at Harvard, argue that greater opposition to redistributive policies may actually be a predictable reaction to having slipped in the distribution oneself:

People exhibit a fundamental loathing for being near or in last place — what we call “last place aversion.” This fear can lead people near the bottom of the income distribution to oppose redistribution because it might allow people at the very bottom to catch up with them or even leapfrog past them.

This statement is based on a study of theirs based on survey data. The surveys found that people making just above the minimum wage are the most likely to oppose an increase in it."

I see this as a perverse extension of the "you too can be rich" thinking that Ronald Reagan exploited in getting his regressive tax agenda under way. It's also part and parcel of the "beggar thy neighbor" complex that arises in contractionary periods in international trade. I continue to be hopeful that humankind can effect a major evolutionary shift in thinking that will lead to greater equality and peaceful conflict resolution.

It was born in the late 1990s on an unholy trinity of accounting swindles, the dot-com collapse and analyst scandals. It grew on a housing boom and bust that created 5 million (and counting) foreclosures, leaving more than a quarter of bank-financed homes worth less than their mortgages. It matured on a growing wealth disparity that eviscerated the middle class and brought back the plutocracy of the 1920s. It reached its peak with the bailout of reckless bankers, who were rewarded for their irresponsibility with what may be the greatest wealth transfer in human history."

Worth a read. Barry's three-pronged reform program makes a lot of sense.

Monday, October 17, 2011

I’ve been saying for years that Consumption at 70% of GDP is unsustainable. Comstock calls a double dip recession in the works, as Rosenberg does in last post, but the implications of Consumption falling back to its long-term average percent of GDP are secular, not cyclical.

Banks pump and dump bad debt on to securitization markets (with the help of greedy fee-earning Wall Street banks and whoring ratings agencies)… bad debt spreads to banks across the face of the Earth, destabilizing financial markets… central banks buy up bad debt to hide it on their opaque balance sheets… sovereign governments back the bad debt purchased by the central banks… commercial banks in the meanwhile load up on sovereign bonds to have some assets on their balance sheets while consumers and businesses are not doing a lot of borrowing… and, mirabile dictu, the sovereigns start to wobble and the commercial banks are back where they started from….

Thanks Richard Nixon, for putting the world on fiat money. Thanks Alan Greenspan and Ben Bernanke for saying there’s no loan that can’t be made.

If the Republicans win the White House, we will have fiscal contraction that will precipitate a second financial crisis as the bad debt pigeons come home to roost (not to mention the trillions of dollars of derivative bets that were made by institutions collecting “free money” by selling un-backed “protecition” on sovereign debt and all manner of other hideous paper out there….

Background: When Wall Street talks about the "failure" of a bank or other financial institution it means the failure of the company to pay off its own bondholders. It does not mean that depositors, counterparties or other bank customers lose money ...."

Tuesday, October 11, 2011

It occurs to me that it will probably take a dozen years—if it ever happens—to amend the Constitution to take the money out of politics, to recognize that democracies are made up of human beings, not corporations.

As I pointed out a couple of posts ago, it will probably have to come up from the grass roots, through the state legislatures, and not through Congress, which is hopelessly corrupt.

The John Roberts Supreme Court has done its best to hand the country over to the plutocrats with a decision that is stunning in its idiocy, namely, that corporations are people. We now have super-pacs that are able to accept unlimited amounts of money on an anonymous basis to interfere with any political campaign in the country. Do you think all that money will come from onshore?

The “conservative” members of the Roberts court should be prosecuted for treason.

It’s going to be a long war, that will be fought in meetings with neighbors and local politicians, to take back our state and local governments first. The money will come down to the local level and poison the atmosphere, for sure. The battle comes down to convincing the conservatives that democracy is for people, not corporations. It’s all about conserving our democracy.

Let’s make our goal amending the Constitution to overturn Citizens vs. United States—atleast. Even better, let’s introduce spending limits on campaigns and make them stick.

Let’s see if we can get this done by 2023, close to the forecasted end of the fourth turning.

Jeffrey Immelt has his head up his butt. Look at the smugness on that self-satisfied face. This picture is worth a thousand words about how far out of touch our ruling class is with the American people.

In a 60 Minutes interview on Sunday, Obama’s chosen go-to guy on job creation, General Electric’s chairman and CEO Jeffrey Immelt, our Jobs Czar, had this to say about the misconceptions of those protesting Wall Street in over 800 cities across the nation by the tens of thousands,

I want you to root for me. Look, every one in Germany roots for Siemens, everyone in Japan roots for Toshiba, everyone in China roots for China South Rail, I want you to say, win GE.

I think this notion that it’s the population of the US against big companies is just wrong.

Well Jeff, let’s take an unvarnished look at the differences between those companies in Japan and Germany as regards the ratio of pay for a ceo to that of the average worker compared to ceo’s like yourself in American corporations, shall we?

In Japan the ratio of pay for a ceo compared to that of the average worker is…… 11 to 1,

In Germany that ratio expands to a dizzying…… 12 to 1,

and in the the old US of A Jeff ?….. it’s 475 to 1.

In addition Jeff, your company has one of the worst records of any American corporation for exporting American jobs overseas. Since you assumed control of GE, you have cut one-fifth of your company’s U.S. work force while increasing the number of your companies overseas employees dramatically. Your company, the largest corporation in America, paid no taxes in 2010 despite making $145.2 billion in profits and receiving nearly over $5 billion in federal subsidies in that same period.

The adage “with friends like you, who needs enemies” comes to mind.

You and your ilk, as well as those who appointed you to the position you now hold in government, belong in jail for destroying the economic well being of millions here and abroad, and for forcing the American population into the streets to address the problem because of the harm you have caused to the machinery of democracy in America.

Thursday, October 6, 2011

Capitalism would require that government let bankrupt firms fail. Capitalism would require that the owners of capital—not corporate managements—would have a majority say in how companies are run. Capitalism would never permit the rich to impose their personal investment losses on the rest of tax-paying Americans. In-your-face bonuses paid to Wall Street executives whose firms and jobs were saved on the taxpayers’ back would not have happened under a capitalist system.

Democracy would require that “persons” be people, human beings, not cash-bloated corporations. Democracy would require that the desires of the people would be effected, to a reasonable and rational degree, by their elected representatives, not cynically ignored as they grovel for their campaign dollars before their moneyed donors, a rich class that controls not only the politicians but corporate governance (which they’ve lock up tight), and to an increasing degree, national governments around the world.

In reflecting upon what it would take to amend the Constitution, the phrase “no exit” occurred to me. Here’s the process:

Two-thirds of both houses of Congress vote to propose an amendment, or

Two-thirds of the state legislatures ask Congress to call a national convention to propose amendments. (This method has never been used.)

To Ratify Amendments

Three-fourths of the state legislatures approve it, or

Ratifying conventions in three-fourths of the states approve it. This method has been used only once -- to ratify the 21st Amendment -- repealing Prohibition.

The Supreme Court has stated that ratification must be within "some reasonable time after the proposal." Beginning with the 18th amendment, it has been customary for Congress to set a definite period for ratification. In the case of the 18th, 20th, 21st, and 22nd amendments, the period set was 7 years, but there has been no determination as to just how long a "reasonable time" might extend.

Of the thousands of proposals that have been made to amend the Constitution, only 33 obtained the necessary two-thirds vote in Congress. Of those 33, only 27 amendments (including the Bill of Rights) have been ratified. (source)

It will require a Congress, or two thirds of the state legislatures—both of whom are dependent on rich donors—willing to vote above their own narrow self-interest to get an amendment even proposed. I would guess that it will remain impossible for inside-the-Beltway politicians ever to achieve that state of mind. A proposal to amend will have to come from the state legislatures.

What we have now is a semi-feudal system, a class system supported in principle and in effect by the Republican party, who, as shown a few posts ago, are the party of increasing inequality. So the red states will be hard to get on board with a proposal to amend unless the commoners suddenly wake up to their exploited state.

The Reid tax proposal, to impose a 5 percent surcharge on incomes over a million dollars a year is estimated to generate about half a trillion in incremental revenue, or about a third of the projected deficits near-term. That’s how unequal things are. If only the average Republican could see that they’re being snookered with a load of Reaganite bunkum….

It will take a sea-change of popular opinion about government, taxes, sharing, work, reward, democracy for America to exit the one-way street to neo-feudalism we’re on now.

Wednesday, October 5, 2011

"We the corporations" | Move to Amend: ""We the corporations"On January 21, 2010, with its ruling in Citizens United v. Federal Election Commission, the Supreme Court ruled that corporations are persons, entitled by the U.S. Constitution to buy elections and run our government. Human beings are people; corporations are legal fictions.

We, the People of the United States of America, reject the U.S. Supreme Court's ruling in Citizens United, and move to amend our Constitution to:

* Firmly establish that money is not speech, and that human beings, not corporations, are persons entitled to constitutional rights.

* Guarantee the right to vote and to participate, and to have our vote and participation count.

* Protect local communities, their economies, and democracies against illegitimate "preemption" actions by global, national, and state governments.

The Supreme Court is misguided in principle, and wrong on the law. In a democracy, the people rule. We Move to Amend."

The "revolution" is a joke. As we learned with Katrina, Americans live in an occupied land where mercenaries can spring out of the woodwork at the slightest sign of civil unrest. While Occupy Wall Street might be a start, only Constitutional amendment has a chance of making real, lasting change.